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Financial Statement Analysis

Учебный год
Обучение ведется на английском языке
Курс по выбору
Когда читается:
3-й курс, 3, 4 модуль


Course Syllabus


The course describes the analysis of financial statements and company valuation. Financial statement analysis is the application of analytical tools, technology and techniques to general-purpose financial statements and related data to derive estimates and inferences useful in business analysis. Financial statement analysis comprise of accounting analysis, financial analysis and valuation. The goal of this course is to equip students with the skills needed to perform financial analysis and interpret financial statements properly.
Learning Objectives

Learning Objectives

  • This course is aiming to provide students the basic skills and techniques to analyze financial statements for the purpose of valuation. Students will learn how to evaluate financial statements and perform prospective and equity analyses. Students will acquire knowledge on how to recast and adjust financial statements to estimate of the intrinsic value of the firm.
Expected Learning Outcomes

Expected Learning Outcomes

  • Have an idea about the place and the role of financial analysis in the system of management of the economic entity.
  • Understand the essence of financial terms and to use them properly.
  • Have basic practical skills in financial statement analysis and interpreting financial information.
  • Demonstrate deep knowledge and critical understanding of theories, principles, concepts and methodologies in financial statement analysis.
  • Apply a set of diagnostics to assess the quality of the accounting in financial statements.
  • Evaluate the impact of financial reporting choices on the quality of accounting information including reported earnings.
  • Use strong analytical skills and apply them to solve practical problems.
  • Work effectively in a team environment.
Course Contents

Course Contents

  • Topic 1. Overview of Financial Statement Analysis
    Types of Business Analysis. Components of Business Analysis. Financial Statements- Basis of Analysis. The Annual Report. Comparative Financial Statement Analysis. Ratio Analysis. Cash Flow Analysis. Specialized Analysis Tools.
  • Topic 2. Financial Reporting and Analysis
    Financial Reporting Environment. Nature and Purpose of Financial Accounting. Concept of Income. Fair Value Accounting. Introduction to Accounting Analysis. Earnings Management.
  • Topic 8. Return on Invested Capital and Profitability Analysis
    Importance of Return on Invested Capital. Components of Return on Invested Capital. Analyzing Return on Net Operating Assets. Analyzing Return on Common Equity.
  • Topic 3. Analyzing Financing Activities
    Liabilities. Leases. Postretirement benefits. Contingencies and Commitments. Off Balance Sheet Financing. Shareholders’ Equity. Liabilities at the “Edge” of Equity.
  • Topic 9. Prospective Analysis
    The Projection Process. Short-term Forecasting.
  • Topic 4. Analyzing Investing Activities
    Cash and Cash Equivalents. Receivables. Prepaid Expenses. Inventories. Introduction to Long-Lived Assets. Plant Assets and Natural Resources. Intangible Assets.
  • Topic 10. Credit Analysis
    Liquidity and Working Capital. Operating Activity Analysis of Liquidity. Additional Liquidity Measures. What If Analysis. Importance of Capital Structure. Capital Structure Composition and Solvency. Earnings Coverage. Capital Structure Risk and Return.
  • Topic 5. Analyzing Investing Activities: Intercorporate Investments
    Passive investments. Investments with Significant Influence. Business Combinations. Derivative Securities.
  • Topic 11. Equity Analysis and Valuation
    Earnings Persistence. Earnings Based Equity Valuation. Earning Power and Forecasting for Valuation.
  • Topic 6. Analyzing Operating Activities
    Income Measurement. Non-recurring items. Revenue and Gain Recognition. Deferred Charges.
  • Topic 7. Cash Flow Analysis
    Statement of Cash Flows. Reporting Cash Flows from Operations. Analysis Implications of Cash Flows. Specialized Cash Flow Ratios.
Assessment Elements

Assessment Elements

  • non-blocking In-class activities
    Individual or in small groups, in-class and oline in LMS, open book
  • non-blocking Midterm test
    Individual, online in LMS, open book
  • non-blocking Team project
    In small groups, online in LMS, open book
  • non-blocking Final exam
    The exam will be synchronously proctored via the «Examus» proctoring system (https://hse.student.examus.net). Examination Procedure with the Use of the Examus Service ∙ Install the Yandex.Browser or the Google Chrome web browser (https://www.google.com/chrome/); ∙ Using the Yandex.Browser or Google Chrome web browser, go to the following page: ∙ https://hse.student.examus.net and click on blue button ‘Сессия НИУ ВШЭ’, log in and have your e-mail account verified; ∙ On the examination day, at the appointed time (or 10 minutes before it), go to https://hse.student.examus.net and click on the name of the test you wish to take; ∙ Take a photo of your identification document and send it to the Proctor for verification; ∙ You can now start the exam; ∙ Upon the completion of the exam click on ‘End the Exam’ button; ∙ Close the Examus tab. and click on, log in and have your e-mail account verified; It is necessary to login 15 minutes before the exam is due to begin. Every student can test the «Examus» system here: https://student.examus.net/?sessionId=24799&serverOrigin=https://stage.examus.net/. Some basic information on proctoring: https://spb.hse.ru/mirror/pubs/share/367863268.pdf. Student’s computer should meet the following requirements: https://spb.hse.ru/mirror/pubs/share/367863268.pdf). To participate in the exam, student is obliged to: upload a profile photo, turn camera and microphone on, confirm the identity. During the exam it is forbidden to: communicate (in social networks, with people in the room), use written notes (in a notebook or on printed sheets), open pages in the Internet, use a mobile phone or other electronic devices other than a calculator for calculations. It is also forbidden to make phone calls or receive calls and perform other forms of communication. During the exam it is allowed to use a calculator that only has this function. If the internet communication interruption is up to 5 minutes, it will be regarded as a brief connection break. If the internet communication interruption is 5 minutes or more, it will be regarded as a longer connection break and will entail the exam cessation. The retake procedure is identical to the exam procedure.
Interim Assessment

Interim Assessment

  • Interim assessment (4 module)
    0.5 * Final exam + 0.15 * In-class activities + 0.15 * Midterm test + 0.2 * Team project


Recommended Core Bibliography

  • Financial statement analysis, Subramanyam, K.R., 2014
  • Fridson, M. S., Alvarez, F., & FinancePro. (2011). Financial Statement Analysis : A Practitioner’s Guide (Vol. 4th ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=517757

Recommended Additional Bibliography

  • Fridson, M. S., & Alvarez, F. (2011). Financial Statement Analysis Workbook : A Practitioner’s Guide (Vol. 4th ed). Hoboken N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=382138